Korean wages 12th highest in OECD

By Kang Seung-woo

Korean wages are higher than the average of advanced economies when adjusted for purchasing power, the Organization for Economic Cooperation and Development (OECD) said Sunday. The country’s tax and social security burden imposed on individuals was measured to be lower than most OECD member countries, which offers an explanation for widening inequality here.

According to an OECD report titled ``Taxing Wages,’’ the annual salary of the average Korean was at $43,048 last year on a purchasing power parity (PPP) basis, which was the 12th highest among the 34 OECD member nations and well above their average of $35,576.

Workers in Britain led the list with $53,622, followed by those of Luxembourg and the Netherlands, who made $53,561 and $52,581, respectively. Japan placed 11th with $43,625, while the United States was one notch behind Korea with $43,039.

On a PPP basis, the OECD valued the local currency at 822 won to $1, or about 70 percent of its value based on the current exchange rate of 1,156 won.

Mexico stayed at the bottom of the standings with $10,995 while Chile, Slovakia, Estonia, Hungary and Turkey also remained below the $20,000 mark.

As for taxes and welfare payments, Korea was the fourth lowest among 34 countries with 19.79 percent, with the average standing at 34.86 percent.

The three members that placed lower than Korea were New Zealand at 16.8 percent, Mexico at 15.5 percent and Chile at 7 percent.

Belgium posted a group-leading 55.36 percent ― 21.6 percent for income tax and 33.8 percent for social security expenses ― followed by France with 49.3 percent, Germany with 49.1 percent and Austria with 47.9 percent.

“Thanks to the low exchange rate in the OECD report, Korea’s total gross earnings ranked high. However, as Korea lags behind other advanced economies in terms of the social security system, we cannot say that local employees receive a higher salary,” said an analyst of the Korea Labor Institute.